Details on the hardware are slim, but the idea is that the hardware would allow for playing Android games on the big screen in your living room. The Journal reports that Google is hoping to "combat similar devices that Apple Inc. may release in the future." Apple has long been rumored to be working on a TV of its own that would bring apps and other features to the big screen.

Beyond the gaming system, the Journal says, Google is working on a smartwatch, which would pair with one's phone. There has been speculation about Apple and Google's smartwatch plans for the past number of months.

Google is rumored to be releasing the next version of Android -- Android 5.0 or Key Lime Pie -- this fall. The company is also said to bring that version to other non-phone devices, such as laptops and a new media streaming device for the TV.

Google released last June the Nexus Q, an orb-shaped media-streaming device, but software bugs and issues held it back from being released to the public. Google's Google TV platform, which is integrated into TVs from brands like Vizio and Sony, hasn't been the hit the company had hoped for in the living room.

"There are so many ways computers can get so much richer, so much better, so much more immersive. Android is the perfect opportunity for us to do that, to change the status quo of how people use computers."